Key Takeaways:
Terraform Labs (TFL), the firm behind Terra Luna Classic (LUNC) and Terra Classic USD (USTC), has executed a large-scale burn of 251 billion LUNC and 264 million USTC coins from circulation.
Terraform Labs Initiates Token Burn to Eliminate 251B LUNC and 264M USTC From Supply
The token-burning procedure was undertaken as part of a settlement with the US Securities and Exchange Commission (SEC), which required Terraform Labs to dispose of specific assets held in its Shuttle Bridge wallets.
In an X post following the event, TFL clarified that the token burn is linked to the company’s decision to permanently shut down Shuttle Bridge, a cross-chain transfer solution for Terra Classic tokens. TFL closed the bridge on October 31, as a precautionary measure and to avoid any legal complications.
In its settlement with the US government, TFL agreed to destroy all tokens in Shuttle Bridge wallets to comply with regulatory requirements. The burn resulted in around 4% of the LUNC supply being eliminated. Terra Luna Classic has a total supply of around 5.45 trillion tokens.
251 billion LUNC and 174 million USTC were held in Shuttle Wallets, which were completely disposed of by Terraform Labs.
While the move has fueled speculations of a potential rally in the LUNC price, experts suggest that it could be insufficient to make prices skyrocket due to a lack of demand. Terra Classic USD also saw its supply reduce to 5.56 billion following the token burn event.
Despite the substantial reduction in circulating supply, the market’s reaction to Terra Luna has been subdued. LUNC saw its price rise by 3%, while the price of USTC rose by 1.7% following the token burn. Analysts attribute the limited price movement to the overall large supply cap of both tokens, as the burn represented just a fraction of the total amount in circulation.
Technical Indicators Point at a Future Uptrend for Terra Luna Classic (LUNC)
The muted market reaction also points to the need for more drastic supply control measures to bring about meaningful price changes. With the Terra Classic community focused on restoring long-lost value, this event may pave the way for further steps aimed at boosting the price of LUNC.
However, technical indicators suggest the possibility of a future uptrend for LUNC, with analysts identifying a “falling wedge” pattern on the token’s price chart, which is a formation typically signaling a bullish reversal. This pattern forms when prices oscillate between converging trendlines, hinting at a potential breakout.
The support level for LUNC is currently around $0.000083572, where a strong buying interest has been observed for the cryptocurrency. With resistance within the pattern gradually decreasing, things point to a diminishing bearish trend.
Some analysts believe that if LUNC can break through its upper trendline, then it could aim for a target price of around $0.0001, setting the stage for further gains if market conditions are aligned.
The Terra Luna Classic community has been working hard to continue supporting the ecosystem with additional token burn initiatives and tax reforms. Crypto exchange Binance also contributed to the burn efforts after recently eliminating over 1 billion LUNC tokens from circulation during the 27th batch of Terra Luna Classic burns.
These contributions brought the total amount of LUNC burned by the community to nearly 137 billion.
Furthermore, the community recently approved a new tax proposal aimed at simplifying transactions on the Terra Classic blockchain. The “Reverse Charge” mechanism is designed to streamline how taxes are deducted, making it easier for both users and developers to engage with the network.
These community-led efforts demonstrate the ongoing commitment to bringing back LUNC to the level where the ill-fated LUNA token was two years ago. However, the path to $1 remains treacherous and uncertain.
While the LUNC and USTC burns were a significant effort by Terraform Labs and the Terra Classic community, market sentiment for the project remains cautious. Many investors are waiting for more supply reduction events or utility enhancements to drive sustainable price increases for both tokens.
At the time of writing, LUNC is trading at $0.00008422 – up 0.6% over the past 24 hours.
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